Nixon's budget likely to bank on Medicaid revenue

When Missouri Gov. Jay Nixon outlines a budget on Monday, he will be banking on federal Medicaid money to help bolster the state revenues available to spend on education and other government services.

Associated Press

When Missouri Gov. Jay Nixon outlines a budget on Monday, he will be banking on federal Medicaid money to help bolster the state revenues available to spend on education and other government services.

Nixon' proposed budget for the 2014 fiscal year also is likely to propose more spending than in years past, a reflection of the state's gradually improving tax collections after several lean years of cuts.

"It's nice to be beyond that — talking about beginning to invest dollars in things that will make a long-term difference to the state," Nixon said in a recent interview with The Associated Press.

Missouri currently is operating on a $24 billion budget that expires June 30. That bottom line is likely to increase when Nixon, a Democrat, presents his budget plan for the next fiscal year as part of his State of the State address. It will be up to the Republican-led Legislature to either accept or reject Nixon's recommendations and send a budget back to the governor by early May.

Here are a few things to watch for in Nixon's budget plan:

MEDICAID

Nixon already has said his budget will include a Medicaid expansion — as allowed under President Barack Obama's health care law — that could cover an additional 259,000 people during the next fiscal year. That expansion could bring an additional $907 million of federal money to Missouri doctors, hospitals, nursing homes, pharmacies and other medical providers.

Nixon's budget plan will assume that the recipients of that federal Medicaid money will pay an additional $15.5 million in Missouri income and sales taxes. His budget also will assume $31 million in savings stemming from the Medicaid expansion, because the federal money would decrease the amount the state must pay to cover some mental health services and programs for disabled residents and pregnant women.

All told, that's more than $46 million resulting from the Medicaid expansion that Nixon plans to use for other purposes in state government, said Nixon's budget director, Linda Luebbering.

Republican lawmakers generally have expressed opposition to the proposed Medicaid expansion and skepticism that an influx of federal money will result in a surge in state tax revenues. That could create an immediate budget conflict between Nixon and lawmakers.

"If the General Assembly decides that we don't agree that the Medicaid expansion is prudent — or we don't agree that it creates the jobs or increased revenue that they say it will — that means he's going to spend money on things that we have to go in and remove" from the budget, said Sen. Ryan Silvey, R-Kansas City, a former House Budget Committee chairman who now serves on the Senate Appropriations Committee.

EDUCATION

Nixon already has said that he will seek more spending for early childhood education programs, which took a cut in the current budget. He also has expressed support for performance-based funding for higher education institutions and an expansion of the A-plus community college scholarship program to more high school graduates.

Although Nixon has not revealed the specific spending proposals, the Coordinating Board for Higher Education has given him a potential blueprint.

The board recommended a $25.5 million funding increase for public colleges and universities, about 3 percent more than they currently receive. The board's plan calls for that money to be distributed to institutions only if they meet specific performance measures, such as student retention and graduation rates.

The higher education board also recommended a $3 million increase in A-plus scholarship funding, an $8 million increase in Bright Flight scholarships for students who score well on standardized tests and a $25 million funding increase for Access Missouri scholarships that are based both on financial need and academic merit.

Nixon has said little about how much additional money his budget will include for K-12 education. But it's virtually guaranteed it will fall short of full funding. Missouri would need an additional $686 million of basic aid next academic year — on top of the current $3 billion — to meet the full amount called for under the state's school funding formula. That would be almost three times the projected increase in Missouri's net general revenues for the next fiscal year.

BONDING

Nixon also could use his State of the State address to lend support to a bond issuance for building projects.

Some lawmakers are working on a plan that could authorize around $1 billion of bonds to finance construction at college campuses, repairs at state buildings and perhaps even new road work. They contend the timing is right to take on more debt, citing low interest rates and the fact that Missouri recently made the final payment on a $600 million bond plan authorized by voters in 1982.

Nixon has not yet joined the bandwagon for a new bonding proposal. But history suggests that he might be inclined to do so.

During his first year in office, in 2009, Nixon expressed support for a bonding plan and raised the possibility of calling a special session if lawmakers could reach a consensus on a specific plan. That consensus is closer to reality now than at any point in recent years.